Shop price rises accelerate in May

Shop price inflation accelerated in May but retailers were kept in check by consumer caution and intense competition on the high street, figures show.

Overall prices were up 0.8% this month from 0.4% in April, and above the 12 and six-month average increases of 0.2% and 0.6% respectively, according to the BRC-Nielsen Shop Price Index.

The figures were driven by the second month of inflation at 0.2% in non-food products after six years of deflation.

Source: British Retail Consortium
Source: British Retail Consortium

The furniture and health and beauty sectors in particular increased their prices to levels last seen in 2015 and 2016 following a period of deep discounts, although the British Retail Consortium (BRC) said weak consumer spending on discretionary items was likely to limit any significant rises.

Food price rises continued to slow in May to 1.8% from 2.2% in April, although fresh food inflation held steady at 1.5%.

BRC chief executive Helen Dickinson said: “Rising costs associated with currency depreciation, stockpiling, rising minimum wage and the Apprenticeship Levy have all put upwards pressure on prices for a while, and it now appears that retailers cannot absorb them any longer.

“Unless the Government addresses future cost rises, including spiralling business rates, we may see larger price rises in the future.”

Mike Watkins, head of retailer and business insight at Nielsen, said: “Whilst there are still cost price increases coming through the supply chain, food inflation remains lower than CPI and supermarkets continue to offer price reductions, in particular on seasonal food and drink, which is helping to offset other cost of living increases.

“Inflation has returned to non food but consumers remain cautious and there is intense competition on the high street.

“With non food retailers facing uncertain levels of demand, price discounting could quickly return if demand weakens over the next few months.”